Discuss Ambedkar’s ideas on India’s pre colonial economy.

 After long years of neglect, the ideas of B.R. Ambedkar seem to be gaining currency. While his thoughts on Indian society and politics have garnered more attention, some of his economic ideas too deserve greater attention. Known largely as the father of the Indian Constitution and a leader of Dalits, Ambedkar began his career as an economist, making important contributions to the major economic debates of the day.

He was, in fact, among the best educated economists of his generation in India, having earned a doctorate in economics from Columbia University in the US and another from the London School of Economics. Ambedkar’s London doctoral thesis, later published as a book, was on the management of the rupee. At that time, there was a big debate on the relative merits of the gold standard vis-à-vis the gold exchange standard.

The gold standard refers to a convertible currency in which gold coins are issued, and may be complemented with paper money, which is pledged to be fully redeemable in gold. In contrast, under the gold exchange standard, only paper money is issued, which is kept exchangeable at fixed rates with gold and authorities back it up with foreign currency reserves of such countries as are on the gold standard.

Ambedkar argued in favour of a gold standard as opposed to the suggestion by John Maynard Keynes that India should embrace a gold exchange standard. He argued that a gold exchange standard allowed the issuer greater freedom to manipulate the supply of money, jeopardizing the stability of the monetary unit.

Ambedkar’s Columbia dissertation was on the state-centre financial relations under the guidance of Edwin Seligman, one of the foremost authorities on public finance in the world. Ambedkar argued that under a sound administrative system, each political unit should be able to finance its expenditure by raising its own resources, without having to depend too heavily on another.

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